CHICAGO, Sept 9 (Reuters) - With prices for U.S. livestock on the decline due to larger cattle and hog herds, meat processors are jumping on the jerky bandwagon.

In recent years, dried-meat snacks have gained popularity as Americans embrace diets packed with protein and less sugar and fat. Jerky has overcome its image as a highly salted pseudo-food found at gas stations and convenience stores.

Meat-snack makers have toned down the fat and salt and now tout the product’s perceived health benefits, analysts said. “It’s one of those things where people think it has a health halo around it,” said Darren Seifer, analyst at market research firm NPD Group.

Purveyors of upscale jerky have gotten in on the act, including chocolate maker Hershey Co which acquired premium beef jerky maker Krave Pure Foods early last year.

U.S. per-capita consumption of meat snacks has risen 14 percent since 2012, far outpacing the growth of other savory snacks, according to NPD Group. U.S. jerky sales totaled $1.5 billion for the 52 weeks ended Aug. 7, market research firm IRI said.

Tyson Foods Inc, ConAgra Foods Inc - owner of the Slim Jim brand - and other meat producers seek to piggyback on jerky’s popularity to find new customers and markets for soaring supplies of cheaper beef, pork and poultry.

“The cost of raw materials has decreased versus prices a few years ago, resulting in lower average prices for jerky,” said Jeff Caswell, general manager of Tyson-owned Hillshire Farm and Ball Park Brands.

U.S. meat producers have grappled with lower prices for several months. For the week ending Sept. 3, choice wholesale beef averaged $195.67 per hundredweight (cwt), down 26 percent from its record high in May 2015. Pork averaged $77.71 per cwt, a 43 percent drop from the all-time high of July 2014, according to the U.S. Department of Agriculture.

“This decrease is bringing consumers back to the category, while also attracting new consumers who may not have previously been jerky purchasers,” said Caswell.

Jerky products are available at grocery chains including Wal-Mart Stores Inc, Costco Wholesale Corp and Whole Foods Market Inc. A bag of meat jerky averaging about 2.5 ounces can range in price from around $4 to over $8 for premium products.

While beef is the most popular meat protein for making jerky, pork and turkey are gaining popularity, along with such exotic meats as bison, kangaroo, salmon and even earthworms.

Marketing of jerky products has surged. Hershey’s KRAVE brand featured U.S. Olympic swimmer Michael Phelps in a recent campaign.

Price has also been a factor, as meat supplies surge and push costs for producers lower.

The size of the U.S. cattle herd has returned to a five-year high after falling to a 63-year low in 2014 following several years of drought in parts of the country.

The hog population hit a record high last year as the industry climbed back from the Porcine Epidemic Diarrhea virus that erupted in May 2013 and killed millions of pigs.

“Right now is much more financially attractive and I think that’s why we’re seeing so many new brands,” said Adam Beane, ConAgra’s meat snacks senior brand manager.

In addition to companies offering niche jerky products, such as pairing nuts with dried meat, larger producers are also branching out.

KRAVE has introduced a bar featuring dried fruit and quinoa with either turkey, beef or pork jerky.

Even Slim Jim is looking at add-ons, but not at the expense of its lucrative meat sticks line.

“I do think there are some really interesting entries there and I’d be lying to you if I said we haven’t done some testing,” said Beane. (Editing by Matthew Lewis)